Governor Spitzer signed into law on August 1st legislative bill A.6117-A/S.3577-A, which will ensure that school districts have sufficient funds to pay refunds ordered by real property tax certiorari cases.
Sponsored by Assemblywoman Sandy Galef and Senator Stephen Saland, the law states that school districts will be able to keep reserve funds for more than four years if the tax certiorari case has a duration of more than four years, a significant relief for school districts involved in tax certiorari cases, which can end up costing schools millions of taxpayer dollars.
New York State’s Education Law requires school districts to return funds placed in reserve for the payment of refunds ordered to be paid in real property tax certiorari cases four years in courts following the deposit. However, many tax certiorari cases last more than four years and because reserve funds are allowed only to be kept for four years, school districts are met with financial hardship before the case even draws to a close. Districts are then forced to raise tax rates to make up for often massive deficits.
This new law, Chapter 445 of 2007, would amend subdivision 1-a of Section 3651 of the Education Law, clarifying that the reserve funds could be kept on deposit for more than four years if the tax certiorari proceeding has not been finally determined.
Sandy Galef stated, “When school districts are faced with tax certiorari cases that go on for more than four years, they are met with incredible financial burden, requiring them to raise tax rates to make up for their lost funds. This new law will be a huge benefit for school districts, as it will save both schools and taxpayers a great deal of grief from long-lasting tax certiorari cases that can wipe out reserve funds and send school budgets through the roof.”
Senator Saland stated, “School districts need flexibility so that tax proceedings lasting longer than four years do not negatively impact taxpayers. As Chairman of the Senate Education Committee, I am pleased this new law will provide that flexibility."
Superintendent of Schools for the Public Schools of the Tarrytowns Howard Smith stated, “Tax certiorari proceedings are complicated and the stakes for school tax payers are high. Having more flexibility in maintaining tax certiorari reserve funds will provide an important tool for school districts to use in our efforts to put together fiscally responsible long term plans for addressing the impact of multi-year tax reimbursement liability.”